What will the future Law for the Creation and Growth of Companies consist of?

What will the future Law for the Creation and Growth of Companies consist of?

On December 17, 2021, the Council of Ministers approved the draft bill of the “Create and Grow Law“, one of the fundamental reforms of the Recovery, Transformation and Resilience Plan.

Objectives of the future “Create and Grow Law”. 

This regulation will be aimed at promoting the creation of companies, favoring their expansion and development and improving business throughout the national territory. This has been expressed by Nadia Calviño, the First Vice President of the Government and Minister of Economic Affairs and Digital Transformation. 

In this sense, the main objectives are the following:

• Lightening the development of business creation, in order to establish an active, fast and telematic way to shorten the time and costs of entrepreneurship.  
• Dealing with commercial delinquency, by controlling access to public subsidies to companies that fail to meet payment deadlines.  
• Removing legal obstacles to economic activities, by increasing the possibilities of operating without a license and encouraging cooperation between different public administrations. 
• Strengthening business financing instruments.

What advantages will this bring for companies? 

In this sense, this new Law reduces and simplifies the procedures to create companies and their economic cost. Thus, there will be the possibility of establishing a Limited Liability Company with a share capital of only one euro, compared to the current minimum of 3,000 euros, and the notary and registry fees will be reduced by means of telematic creation. 

Another of the advantages brought about by this regulation is its inclusion of measures against late payment, which is currently one of the most common causes of solvency, profit and performance problems for small and medium-sized companies. Likewise, alternative instruments to bank credit will be strengthened, specifically crowdfunding or participative financing, collective investment and venture capital.

It is important to note that, thanks to this new regulation, the regulatory framework for economic activities will be improved, since the current legislation will be simplified, obstacles will be reduced and the catalog of license-free activities will be expanded. In addition, the role of the new sectoral conference for Regulatory Improvement and Business Climate will be strengthened.

Main aspects included in the new Law on Business Creation and Growth

The Law on Business Creation and Growth will oblige companies to issue and send electronic invoices in their commercial relations with other companies and self-employed professionals, in order to ensure greater traceability and control of payments. 

Companies that do not comply with payment deadlines will not be able to benefit from public subsidies, including those of the Recovery Plan. 

When will the new Create and Grow Law come into force?

The Law could be approved, foreseeably, this September in the Senate and will enter into force in two phases, depending on the type of company.

In this respect, companies and freelancers with a turnover of more than 8 million euros per year will have a period of one year from the publication of the Law in the Official State Gazette. However, companies with a turnover of less than 8 million euros have a term of three years.